What SiriusXM’s Acquisition of Pandora Means For Cars

The Pandora Media Inc. application is seen in the App Store on an Apple Inc. iPhone in an arranged photograph taken in Washington, D.C., U.S., on Friday, May 5, 2017. Pandora is scheduled to release first-quarter earnings figures on May 8. Photographer: Andrew Harrer/Bloomberg

With its technology firmly embedded in the dashboard of nearly every new vehicle on the market, SiriusXM has an enviable place in the music business. Now the company is making moves to stake an even larger claim and solidify its dominance.

SiriusXM announced today that it will buy streaming music service Pandora Media for $3.5 billion. It already purchased 19% of the mobile app for $480 million last year, and completion of the all-stock deal would create the world’s largest audio entertainment company, which will help the satellite-based platform compete against other personalized streaming music services, such as Apple Music and Spotify.

As more auto manufacturers integrate device mirroring technology such as Apple CarPlay and Android Auto into vehicles, Sirius XM ‘s in-dash advantage is waning. Users of these telematics apps put on-demand streaming music front-and-center rather than the music and news channels that SiriusXM curates. Buying Pandora would give the entertainment giant prominent real estate in mobile devices and in application-based infotainment systems.

It also opens the door to additional revenue streams, according to Gartner analyst Michael Ramsey.

Vehicles are fast-becoming mobile devices that will know a lot about their occupants. Information about daily commutes, shopping habits, and favorite haunts could translate into data that advertisers could use to deliver targeted ads to a captive audience via Pandora.

“Sirius has a huge play into the telematics world. It could combine the streaming services content along with things like vehicle position and usage to create curated ads for individuals,” says Ramsey. So what does that mean for the consumer?

“That means the opportunity to offer freemium services for telematics in exchange for personalized ads,” he says.